Gaining Access to Drilling Rig Floor - ND

Oil and Gas Leasing Help
1

I am currently negotiating an OGL for some family minerals in Bottineau County, North Dakota. One of the clauses I am trying to add to the OGL is access to the rig floor, drill site operations, etc. The lawyer I am negotiating with is out of Minnesota and has not done much work in the O&G business. She told me that no royalty owner ever gets access. She even said Wisconsin owners do not get access, unless specifically stated in the JOA. I have never heard of that before. In fact, my grandfather used to add a similar clause in all his OGLs in North Dakota.

Can anybody that has done more work in the area let me know if this attorney is correct? The Lease is very unfavorable for us anyhow so we will most likely not lease. I was just wondering for future references about the access to the drill site operations. And I also understand there could be liability that is involved with that, but could be alleviated by certain indemnifying language in the OGL.

2

Why do you feel compelled to go on the drilling rig floor? Do you want to star in reality TV like in the series “BLACK GOLD”?

3

Because we are also operators and have drilled many wells in ND and other states. Watching the entire process can further help someone understand the assets they own, especially if they own assets adjacent to where the well is being drilled. I have sat on wells before in KS and it helped me learn of the difficulties that arise while drilling, the geological strata of the field, etc.

4

This is taken directly out of the standard JOA used by the oil and gas industry.

Access to Contract Area and Information:

Each party shall have access to the Contract Area at all reasonable times, at its sole risk to inspect or observe operation, and shall have access at reasonable times to information pertaining to the development or operation thereof, including Operator’s books and records related thereto.

If you are a royalty owner, add it to your lease.

5

Thank you for your help Robert.

6

I know the members of this forum are not the type of individuals that are wanting to “star in reality TV”. I do believe these members are not deserving of your comment and have far deeper questions to the industry than you must have; for reasons that you are not privy to, nor need to be. I have been on rig floors many times, many years ago. Thank you to Bob Malone for the correct information.

Dave Quincy said:

Why do you feel compelled to go on the drilling rig floor? Do you want to star in reality TV like in the series “BLACK GOLD”?

7

I would think that you would just get in the way, serve as a distraction, and incur unnecessary risks. It is a dangerous place where a hard hat is inadequate protection. I roughnecked in my younger days.

If I was an operator, I would turn you down, and tell you to stay off the platform, believing that there is no “reasonable time” as far as I was concerned. There is no need for you to interfere with operations by making them watch out for you, in addition to the people who need to be there.

The part about furnishing you with well logs is more than adequate. Otherwise, you come off as star struck, having watched too many episodes of Black Gold.

Brian Ballantyne said:

Because we are also operators and have drilled many wells in ND and other states. Watching the entire process can further help someone understand the assets they own, especially if they own assets adjacent to where the well is being drilled. I have sat on wells before in KS and it helped me learn of the difficulties that arise while drilling, the geological strata of the field, etc.

8

Brian, I was born on a rig floor, spent half my life there; I applaud you for wanting to have access to it. It is fascinating to see and the notion that it is dangerous or might cause distractions or that you would interfere with anything is ridiculous. Good grief.

I am an operator and I would never turn you down. Those are your minerals buddy we are looking for and if you want to come up and have a look you’d be more than welcome. I make you wear a hardhat and show you round. I think you’ll find that most folks in the oilfield are fair and good and I can assure you if you showed up in the TP’s trailer, said you were a mineral owner, he’d be happy to take you up.

Ask for access and you’ll get it. Or get somebody from somewhere else than Minnesota (??!) to help you.

9

Now that is CLASS!

10

The notion that it isn’t dangerous is absurd. I think that E.R. doctors in and around active drilling areas would contradict that. Drilling accidents are a common occurrence. They go with the territory. Anyone who would deny that is classless fool. Malone got his clause from a JOA. That clause was intended for operators, not mineral or royalty owners. They don’t have any business visiting an active rig, and anyone who would allow it, while disavowing any of the dangers, should be terminated post haste. They are creating too much potential tort liability for their client company. They are also compromising the security of the rig. Anyone can drive up and say they are a mineral owner. Fortunately, most operators wouldn’t allow them past the checkpoint at the end of the road.

11

I’m just glad federal law gives me the right to inspect my wells that are on Indian reservation land, or the books in the office, anytime during business hours, should I ever have the desire to do so.

12

A classless fool, Mr. Quincy?

I think you should just stay at home all day and watch Oprah on TV, sir. Those are good men out there on those rigs doing a job. A job that serves the energy security of their country and provides well for their families. They are proud of that, I assure you. I am. Being a roughneck may be a little more dangerous than pecking away at a keyboard all day, or walking to the mailbox to get a royalty check, but not much more dangerous. If it is, so be it. We do what we do so many people…don’t have to.

Again, as an operator for the past 60 years, I am happy to share my work place with anyone who has the huevos to want to see it. Ask and you shall receive, Brian. Good luck!

13

A little more dangerous? No, it’s a lot more dangerous. I had a friend who used to talk like you. That was back when he still had all ten fingers, but I guess he got off easy.

You would be the last guy I would hire for a tight hole operation.

There is also no real reason for you to worry about it. If the drive-up mineral owner gets hurt, I promise you they won’t come after you. They will go for the deeper pocket.

You may get run off, but with your experience, you should be able to find more work. Unless word gets around that you are a liability.

14

Will be hard to get because of liability concerns.

15

I still recall some of the horror stories I heard when I worked on a rig. They weren’t pretty. One problem is that many of the locations are so remote, that by the time the ambulance gets there, or even finds the rig, they bleed to death - or whatever. If someone drives them to a hospital, it can usually be a long way to go as well.

Dangerous work for sure. No reason for anyone to sugarcoat it.

After seeing his best friend get killed on a rig, one guy started an organization called NO MORE HURT, or words to that effect. He wants to promote more education and safety on the job site. Very good idea.

16

Mr. Caldwell, if I am a farmoutor, for instance, I would insist on rights to the rig floor. A mineral owner is essentially the same. As an operator I have to carry tens of millions of dollars of liability coverage; if the guy delivering the porta potties falls in one and drowns, chances are I’ll get sued, in spite of the pre-signed service agreements. Somebody on this forum might go to the mailbox this afternoon to see if his royalty check is there and get hit by a snow plow. Life has its “risks.”

The man asking the question wants to put on a hard hat and a pair of Nomex coveralls and come up on the floor to experience his minerals being explored for. He’ll be supervised and likely stand in the dog house door and watch. He did not ask to make a connection, or service the top drive, he wants to watch. He is entitled to that. As an operator I have offered that right many, many times. It creates good will. It’s fascinating, interesting work and I am proud to share it with anyone who wants to learn. And by the way, I have not lost a mineral owner yet on a rig floor, they all survived and walked down the stairs with a big smile on their face. I find it kind of interesting that people vested in mineral development and mineral rights would actually be afraid, or uninterested in the actual process.

Witness a multi-stage frac when you can; wow! 40,000 HP all wound out at the same time, so loud you can’t hear, the ground shakes. It’s awesome. It’s…the real deal.

10 Fingers Mike

17

I usually go twice, once the pad is built, my wife and I go and bless the site so to speak. The second time we try to go during the frac, reminds me of my younger days on the flight deck loud, active, and everybody has a job.

Have a H2S alert thingy in the truck, don’t really care about going up to the rig floor, I can’t outrun anybody if a kick gets ugly. I used to take new folks to Cat 3 when a Tomcat was in burner. Some wanted to run and some loved it. Get the same vibes watching a frac.

Yes we have it in our lease,

18

There are many oil field accidents. Anyone who would allege that it is a safe environment for workers and visitors is in extreme denial. Life has risks, but we as intelligent human beings are able to minimize those risks.

In the oil field, serious personal injuries occur because it has a high number of oil field employees. No, not all of them are going to lose fingers or get hurt.

Oil field employees are in contact with explosive and flammable liquids, have difficult working conditions where common injuries occur due to slips and falls, burn injuries, head injuries (a hard hat offers minimal protection), spinal injuries, brain injuries, fire and explosion injuries.

Extensive steel rigging and heavy pipes are commonplace on the oil derricks particularly in the early stages of oil field development. These materials are constantly being hoisted into place. It is little surprise that the highest percentage of oil field related fatalities results from laborers being struck by large objects. Workers are asked to construct and tear down riggings and to insert and remove pipes on a regular basis. This contact can lead to injury and death during the exploration process.

Total blow-outs can also occur if the equipment designed to prevent them malfunctions or fails.

Anyone who would diminish or treat lightly the dangers of working on or being around a rig, really is foolhardy.

Mike said:

Mr. Caldwell, if I am a farmoutor, for instance, I would insist on rights to the rig floor. A mineral owner is essentially the same. As an operator I have to carry tens of millions of dollars of liability coverage; if the guy delivering the porta potties falls in one and drowns, chances are I’ll get sued, in spite of the pre-signed service agreements. Somebody on this forum might go to the mailbox this afternoon to see if his royalty check is there and get hit by a snow plow. Life has its “risks.”

The man asking the question wants to put on a hard hat and a pair of Nomex coveralls and come up on the floor to experience his minerals being explored for. He’ll be supervised and likely stand in the dog house door and watch. He did not ask to make a connection, or service the top drive, he wants to watch. He is entitled to that. As an operator I have offered that right many, many times. It creates good will. It’s fascinating, interesting work and I am proud to share it with anyone who wants to learn. And by the way, I have not lost a mineral owner yet on a rig floor, they all survived and walked down the stairs with a big smile on their face. I find it kind of interesting that people vested in mineral development and mineral rights would actually be afraid, or uninterested in the actual process.

Witness a multi-stage frac when you can; wow! 40,000 HP all wound out at the same time, so loud you can’t hear, the ground shakes. It’s awesome. It’s…the real deal.

10 Fingers Mike

19

Mr. Quincey

The biggest danger is driving Hwy 72 from Tilden west or Hwy 16 north or south. 72 west from Three Rivers is much more dangerous than visiting a rig floor. If your point is the drilling is dangerous yes it is. Basically a risk and reward issue. I am really glad I don’t have you as a company man, it is in the lease, I have an interest in the operations, if you want to deny me access I would be suspect of your reasoning.

You don’t tell me what I can or can’t do and I won’t tell you how to do your job.

20

I’m suspect of your reasoning. If you see a rig out there, what do you think they are doing? Possibly drilling? There is no reason for a mineral or royalty owner to create unnecessary risks or distractions. What are they going to add to the entire process? Zero.

I’ll tell you what you can do. Stay away from the rig. You might hurt your foot.